Timely OCF-18 Denials, or No MIG Defence

Article Summary

In R.H. and TD Insurance Meloche Monnex, 2017 CanLII 1555 (ON LAT), the LAT moves in lock step with previous FSCO and LAT decisions with regards to the harsh remedies for technical violation of section 38.

In the LAT’s newest decision, Adjudicator Leslie found that as a result of the Insurer’s denial beyond the legislated 10 business days provided in s. 38 of the SABS, the consequences of s. 38(11) applied to the case. The Insurer was required to pay for the cost of incurred treatment from the 10th business day until the date of denial. Notably, Adjudicator Leslie indicated that, in considering the date of the Insurer’s denial letter, a further 5 business days were added to allow for delivery by regular mail to the Applicant. She also stated that the explanation provided for the denial did not constitute a “medical reason”. Most importantly, she held that,

“[I]n keeping with section 38(9) of the Schedule, the Respondent breached the provisions of section 38(8) of the schedule and as a result, the insurer is prohibited from taking a position that, for treatment purposes, the Applicant’s impairment falls within the Minor Injury Guideline framework.”

This prohibition applied to all medical and rehabilitation treatment sought in the Accident Benefits claim. According to this decision, the result of a technical breach of section 38(8) is the prohibition of from relying on the MIG or using a MIG defence for the remainder of the medical and rehabilitation claim.

While this result aligns with the FSCO decision in Ferawana and State Farm Mutual Automobile Insurance Company (FSCO A13-005319), it is currently under appeal. In Ferawana, Arbitrator Stramwasser held that State Farm was required to pay for benefits regardless of whether causation was established, whether the MIG applied, or whether the benefits were reasonable and necessary, due to a failure to meet procedural obligations (such as a failure to respond to OCF-18s). Arbitrator Stramwasser overtly rejected State Farm’s argument that the Applicant was still obligated to demonstrate that the requested benefit was reasonable and necessary, as that would render the mandatory requirements of s. 38(11) meaningless. In that case, the Arbitrator held that based on a plain reading of the statute, a technical breach of the procedural obligation with respect to one OCF-18 bars an insurer from making a MIG determination on all treatment plans (due to the word “impairment” rather than “treatment plan” in clause 1 of subsection 11). Accordingly, the remedy applied to the whole claim.

The removal of someone from the MIG for a technical deficiency flies in the face of decisions like Stranges and Allstate, where it was held that a technical breach did not create entitlement. Insurers ought to double their efforts to ensure timely adjusting of files. The question remains, what to do if you have breached section 38? Can you rely on the principle that each OCF-18 ought to be considered on the basis of whether it was “reasonable and necessary”, irrespective of technical violations of the SABS requirements?

The concept of determination on an OCF-18’s merit is supported by Arbitrator Wilson in Chen and State Farm Mutual Automobile Insurance Company (FSCO A13-003892). He held that despite a technical violation and the resulting trigger of s. 38(8.2) (the payment for goods and services incurred when an insurer has not responded within the time limits), the wording of the provision did not foreclose a substantive challenge, such as the substantive entitlement provisions found in s. 15 (“reasonable and necessary expenses”).

Arbitrator Wilson employed a statutory interpretation analysis and a common sense approach to state that it would be a departure from the jurisprudence and the scheme to rule that an error in timing gave rise to an irrevocable payment irrespective of the substantive determination of entitlement.

When FSCO was running the show, the regulatory branch would draft legislation designed to limit coverage, and the adjudicative branch would interpret the statute so broadly as to increase coverage. Well, we saw what happened to the adjudicative branch of FSCO. What will happen at the LAT?

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